Published:July 2011
No. of Pages: 46
Price: $515
Report Summary
Medical Device Company Intelligence Reports provide a full review of the company's activities, from its origins to its latest corporate activity, including mergers and acquisitions, agreements, divestitures, major purchasing contracts and litigation. Sections are included on products, international activities and R&D, as well as a full, in-depth five year financial analysis. An introduction to each report and a full table of contents is provided for review. More than 60 Medical Device Company Intelligence Reports are currently available.
Founded in 1976, Texas, US-based Kinetic Concepts Inc (KCI) is a global medical technology company with primary business units serving the advanced wound care, regenerative medicine and therapeutic support systems markets. The company operates three business units:
Active Healing Solutions (AHS) - based at the company’s headquarters in San Antonio, Texas, the AHS business is focused on the development and commercialisation of advanced wound care therapies based on its negative pressure technology platform (NPTP), which employs negative pressure in a variety of applications to promote wound healing. NPTP comprises three primary product categories: negative pressure wound therapy (NPWT), negative pressure surgical management (NPSM) and negative pressure regenerative medicine (NPRM). NPWT, through the company’s V.A.C. therapy portfolio, currently represents the primary source of revenue for the AHS business. In addition, it continues to develop new products and therapies in NPSM and plans to launch NPRM products to broaden and diversify its NPTP revenue streams in the future. During 2010 and 2011, KCI’s latest NPWT product, the V.A.C.Via therapy system, was launched in the US and in select European markets, respectively. In addition, during 2010, the company launched the Prevena Incision Management System globally. Prevena is an NPSM product designed specifically for the management of surgically-closed incisions. In the acute care setting, KCI bills its customers directly for the rental and sale of its products. In the homecare setting, the company provides products and services to patients in the home and generally invoices third-party payers directly.
LifeCell - located in Branchburg, New Jersey, US, the LifeCell business is focused on the development and commercialisation of regenerative and reconstructive acellular tissue matrices for use in reconstructive, orthopaedic and urogynaecologic surgical procedures to repair soft tissue defects, as well as for reconstructive and cosmetic procedures. Existing products include human-based AlloDerm regenerative tissue matrix and porcine-based Strattice reconstructive tissue matrix in various configurations designed to meet the needs of patients and caregivers. The majority of LifeCell’s revenue is generated from the clinical applications of challenging hernia repair and post-mastectomy breast reconstruction, which is generated primarily in the US in the acute care setting on a direct billing basis. KCI continues efforts to penetrate markets with its other LifeCell products while developing and commercialising additional tissue matrix products and applications to expand into new markets and geographies.
Therapeutic Support Systems (TSS) - also based in San Antonio, the TSS business is focused on commercialising specialised therapeutic support systems, including hospital beds, mattress replacement systems, overlays and patient mobility devices. The business rents and sells products in three primary surface categories: critical care, wound care and bariatric care. Its critical care products, typically used in the ICU, are designed to address pulmonary complications associated with immobility; its wound care surfaces are used to reduce or treat skin breakdown; and its bariatric care surfaces assist caregivers in the safe and dignified handling of obese and morbidly obese patients, while addressing complications related to immobility. The TSS business moved into the patient mobility sector in January 2011 with the acquisition of TechniMotion Medical.
The addition of LifeCell to KCI's portfolio in May 2008 provided the company with additional long-term growth opportunities since changes in the NWPT market – the core of KCI’s business – mean that rivals are emerging with lower-priced, but equally effective, products to challenge KCI’s dominance of the field. Larger and more diversified companies are looking to buy those smaller companies with activities in NPWT – the purchase of BlueSky Medical by Smith & Nephew in 2007 is a good example – and, where it is able, KCI is defending itself by seeking legal opinion as to whether its rivals are infringing its NPWT patent rights. Indeed, KCI and Wake Forest University – which granted KCI an exclusive global licence to certain patents that are integral to the technology incorporated in V.A.C therapy products – are in dispute after a Federal District Court entered an order in a Smith & Nephew case invalidating Wake Forest patent claims. Since the beginning of 2011, KCI has refused to pay any further royalties to Wake Forest, which in turn, has filed a notice to terminate their licence agreement and demanded that KCI cease manufacturing and selling licensed V.A.C. products.
Overall, KCI rents and sells its products in more than 20 countries. The company has approximately 7,100 employees worldwide, operates R&D facilities in the US and the UK, and maintains manufacturing and engineering operations in the US, the UK, Ireland and Belgium. In 2010, KCI generated net income of US$256.1 million on revenue of US$2.1 billion. The AHS business accounted for 70% of revenue, the LifeCell business for 17% and the TSS business for the remaining 13%. In the first three months of 2011, KCI’s earnings were up 30% on a 3% increase in revenues.
On 12th July 2011, KCI entered into a definitive merger agreement under which a consortium comprised of funds advised by Apax Partners, together with controlled affiliates of Canada Pension Plan Investment Board and Canada's Public Sector Pension Investment Board, would acquire KCI in a transaction valued at US$4.98 billion (or US$6.3 billion including KCI’s outstanding debt).
The US$68.50 per share in cash acquisition price represents a premium of approximately 21% to the one-month historical average stock price of US$56.49 to 5th July 2011 (one day prior to press speculation of a transaction) and a premium of 52% to the 12-month historical average stock price of US$45.01 through to 5th July 2011.
James R. Leininger, founder of KCI and former chairman, and certain shareholder parties related to or affiliated with him, which collectively hold approximately 11% of the company's outstanding shares, entered into a voting agreement with the consortium under which those shareholders agreed to vote their shares in favour of the transaction.
The transaction is subject to certain closing conditions, including the approval of KCI’s shareholders, regulatory approvals and the satisfaction of other customary closing conditions but is not subject to any condition with regard to the financing of the transaction. The investment consortium plans to further invest in the global medical products sector to expand KCI's core business, develop new products and extend into new geographies where it believes significant opportunities exist.
As provided for in the merger agreement, KCI was granted a 40-day "go-shop" window (expiring 21st August 2011) during which the company could solicit offers from other potential buyers. If all approvals and closing conditions are met and a superior offer failed to materialise, the deal with Apax-led group is expected to close in the fourth quarter of 2011.
Earlier in July, it was rumoured that KCI was the subject of a takeover approach by the US private equity group, Blackstone, and other investors including the global asset management company, Kohlberg Kravis Roberts.
This company report provides
Overview
Key contact information
Introduction to the company and its current activities
Summary of its financial performance
Who are the company’s major competitors?
Key recent events in an “at a glance” format
Financial Review
Current year and annual financial data, including revenue breakdowns by product area and geographic region (if available)
Table providing in-depth five-year financial analysis
Employee data, including breakdown by company division and geographic location
Strategic Focus
Investigates the company’s aims and its areas of focus
Products
Core product areas, key brands, product approvals and launches Research and Development
How much has been invested in R&D?
Where is the research based?
What alliances and agreements does the company have and with whom?
Manufacturing and Distribution
Identifying the company’s manufacturing locations
Sales and marketing facilities
Agreements
With whom has the company reached agreements and what do they involve?
Key contracts awarded
Mergers, Acquisitions, Minority Investments and Divestments
Litigation
Key Corporate Events
The report was produced as part of Medical Device Companies Analysis (MDCA). For more information on MDCA, click here.
Table Of Contents
OVERVIEW.1
Recent Key Events2
FINANCIAL REVIEW 3
First Half 2011 Financial Results3
AHS4
LifeCell5
TSS.5
2010 Financial Results.6
AHS9
LifeCell10
TSS. 12
Five-Year Financial Data14
Outlook15
Employees.16
STRATEGIC FOCUS17
PRODUCTS19
Product Overview19
AHS.19
NPWT Products21
NPSM Products23
GraftJacket Matrix.23
Competition.23
LifeCell.24
Products and Clinical Applications24
Allograft-Based Regenerative Tissue Matrix Products.24
Xenograft-based Reconstructive Tissue Matrix Products25
Competition.26
TSS26
Products and Clinical Applications27
Critical Care27
Wound Care27
Bariatric Care.28
Competition.28
RESEARCH AND DEVELOPMENT.29
R&D Facilities.29
R&D Expenditure.30
Studies and Trials.30
Transcontinental Wound Registry.30
RICH Study31
Trial Comparing NPWT between the KCI Wound V.A.C. Therapy System and Spiracur’s SNaP Wound Care System 31
Conexa Clinical Trial32
ABTAC Study.32
MANUFACTURING AND DISTRIBUTION33
AHS33
LifeCell33
TSS.33
AGREEMENTS 34
Wright Medical34
Novadaq Technologies.35
Carroll Hospital Group35
3M Health Care35
Hill-Rom36
NovaBay Pharmaceuticals36
Paul Hartmann.36
Avail Medical Products37
Wake Forest University.37
MERGERS AND ACQUISITIONS 38
TechniMotion Medical38
LifeCell38
BioMonde Assets.39
MedClaim.39
Polymedics.39
Beiersdorf-Jobst DVT Products39
RIK Medical.39
Equi-Tron Manufacturing.39
Ethos Medical Group.39
H.F. Systems.39
Trac Medical’s Access Assets.40
Clinical Systems.40
Medical Retro Design40
DIVESTITURES .41
KCI Insurance.41
KCI Financial Services41
KCI Therapeutic Services.41
LITIGATION.42
Wake Forest University.42
Smith & Nephew and Medela.42
Innovative Therapies Inc42
Boehringer and Convatec42
Medela, Mölnlycke Health Care and Smith & Nephew - Germany43
Smith & Nephew - Australia43
Smith & Nephew - Germany43
Smith & Nephew - France43
Smith & Nephew - UK.43
LifeCell44
OIG Investigation.44
KEY CORPORATE EVENTS45
List of Tables
SUMMARY OPERATING RESULTS.iii
KCI – First Half 2011 Financial Results3
KCI - First Half 2011 Revenues by Geographic Area.3
KCI - First Half 2011 Revenue by Business Segment and Geographic Area.4
KCI - AHS Business Segment Revenues, First Half 2011.4
KCI - LifeCell Business Segment Revenues, First Half 20115
KCI - TSS Business Segment Revenues, First Half 20115
KCI – Annual Financial Results, 2006-20106
KCI - Annual Revenues by Geographic Area, 2006-20107
KCI - Annual Revenue by Business Segment and Geographic Area, 2006-20108
KCI - AHS Business, Annual Financial Results, 2006-20109
KCI - LifeCell Business, Annual Financial Results, 2008-2010.10
KCI - TSS Business, Annual Financial Results, 2006-2010.12
KCI – Five-Year Financial Summary, 2006-201014
KCI – Annual R&D Expenditure, 2006-2010 30
Agreements Summary34
Mergers and Acquisitions Summary.38
List of Charts
KCI - Annual Revenue and Operating Income, 2006-2010.6
KCI - Annual Revenues by Geographic Area, 2006-20107
KCI - Annual Revenue by Business Segment, 2006-20108
KCI - AHS Business, Annual Revenue and Operating Income9
KCI - AHS Business, Annual Product Sales, 2006-2010.10
KCI - LifeCell Business, Annual Sales and Operating Income, 2008-2010.11
KCI - LifeCell Business, Annual Sales by Geographic Region, 2008-201011
KCI - TSS Business, Annual Revenues and Operating Income, 2006-201012
KCI - TSS Business, Annual Product Sales, 2006-201013
KCI – 2010 Revenue by Product Area19
No. of Pages: 46
Price: $515
Report Summary
Medical Device Company Intelligence Reports provide a full review of the company's activities, from its origins to its latest corporate activity, including mergers and acquisitions, agreements, divestitures, major purchasing contracts and litigation. Sections are included on products, international activities and R&D, as well as a full, in-depth five year financial analysis. An introduction to each report and a full table of contents is provided for review. More than 60 Medical Device Company Intelligence Reports are currently available.
Founded in 1976, Texas, US-based Kinetic Concepts Inc (KCI) is a global medical technology company with primary business units serving the advanced wound care, regenerative medicine and therapeutic support systems markets. The company operates three business units:
Active Healing Solutions (AHS) - based at the company’s headquarters in San Antonio, Texas, the AHS business is focused on the development and commercialisation of advanced wound care therapies based on its negative pressure technology platform (NPTP), which employs negative pressure in a variety of applications to promote wound healing. NPTP comprises three primary product categories: negative pressure wound therapy (NPWT), negative pressure surgical management (NPSM) and negative pressure regenerative medicine (NPRM). NPWT, through the company’s V.A.C. therapy portfolio, currently represents the primary source of revenue for the AHS business. In addition, it continues to develop new products and therapies in NPSM and plans to launch NPRM products to broaden and diversify its NPTP revenue streams in the future. During 2010 and 2011, KCI’s latest NPWT product, the V.A.C.Via therapy system, was launched in the US and in select European markets, respectively. In addition, during 2010, the company launched the Prevena Incision Management System globally. Prevena is an NPSM product designed specifically for the management of surgically-closed incisions. In the acute care setting, KCI bills its customers directly for the rental and sale of its products. In the homecare setting, the company provides products and services to patients in the home and generally invoices third-party payers directly.
LifeCell - located in Branchburg, New Jersey, US, the LifeCell business is focused on the development and commercialisation of regenerative and reconstructive acellular tissue matrices for use in reconstructive, orthopaedic and urogynaecologic surgical procedures to repair soft tissue defects, as well as for reconstructive and cosmetic procedures. Existing products include human-based AlloDerm regenerative tissue matrix and porcine-based Strattice reconstructive tissue matrix in various configurations designed to meet the needs of patients and caregivers. The majority of LifeCell’s revenue is generated from the clinical applications of challenging hernia repair and post-mastectomy breast reconstruction, which is generated primarily in the US in the acute care setting on a direct billing basis. KCI continues efforts to penetrate markets with its other LifeCell products while developing and commercialising additional tissue matrix products and applications to expand into new markets and geographies.
Therapeutic Support Systems (TSS) - also based in San Antonio, the TSS business is focused on commercialising specialised therapeutic support systems, including hospital beds, mattress replacement systems, overlays and patient mobility devices. The business rents and sells products in three primary surface categories: critical care, wound care and bariatric care. Its critical care products, typically used in the ICU, are designed to address pulmonary complications associated with immobility; its wound care surfaces are used to reduce or treat skin breakdown; and its bariatric care surfaces assist caregivers in the safe and dignified handling of obese and morbidly obese patients, while addressing complications related to immobility. The TSS business moved into the patient mobility sector in January 2011 with the acquisition of TechniMotion Medical.
The addition of LifeCell to KCI's portfolio in May 2008 provided the company with additional long-term growth opportunities since changes in the NWPT market – the core of KCI’s business – mean that rivals are emerging with lower-priced, but equally effective, products to challenge KCI’s dominance of the field. Larger and more diversified companies are looking to buy those smaller companies with activities in NPWT – the purchase of BlueSky Medical by Smith & Nephew in 2007 is a good example – and, where it is able, KCI is defending itself by seeking legal opinion as to whether its rivals are infringing its NPWT patent rights. Indeed, KCI and Wake Forest University – which granted KCI an exclusive global licence to certain patents that are integral to the technology incorporated in V.A.C therapy products – are in dispute after a Federal District Court entered an order in a Smith & Nephew case invalidating Wake Forest patent claims. Since the beginning of 2011, KCI has refused to pay any further royalties to Wake Forest, which in turn, has filed a notice to terminate their licence agreement and demanded that KCI cease manufacturing and selling licensed V.A.C. products.
Overall, KCI rents and sells its products in more than 20 countries. The company has approximately 7,100 employees worldwide, operates R&D facilities in the US and the UK, and maintains manufacturing and engineering operations in the US, the UK, Ireland and Belgium. In 2010, KCI generated net income of US$256.1 million on revenue of US$2.1 billion. The AHS business accounted for 70% of revenue, the LifeCell business for 17% and the TSS business for the remaining 13%. In the first three months of 2011, KCI’s earnings were up 30% on a 3% increase in revenues.
On 12th July 2011, KCI entered into a definitive merger agreement under which a consortium comprised of funds advised by Apax Partners, together with controlled affiliates of Canada Pension Plan Investment Board and Canada's Public Sector Pension Investment Board, would acquire KCI in a transaction valued at US$4.98 billion (or US$6.3 billion including KCI’s outstanding debt).
The US$68.50 per share in cash acquisition price represents a premium of approximately 21% to the one-month historical average stock price of US$56.49 to 5th July 2011 (one day prior to press speculation of a transaction) and a premium of 52% to the 12-month historical average stock price of US$45.01 through to 5th July 2011.
James R. Leininger, founder of KCI and former chairman, and certain shareholder parties related to or affiliated with him, which collectively hold approximately 11% of the company's outstanding shares, entered into a voting agreement with the consortium under which those shareholders agreed to vote their shares in favour of the transaction.
The transaction is subject to certain closing conditions, including the approval of KCI’s shareholders, regulatory approvals and the satisfaction of other customary closing conditions but is not subject to any condition with regard to the financing of the transaction. The investment consortium plans to further invest in the global medical products sector to expand KCI's core business, develop new products and extend into new geographies where it believes significant opportunities exist.
As provided for in the merger agreement, KCI was granted a 40-day "go-shop" window (expiring 21st August 2011) during which the company could solicit offers from other potential buyers. If all approvals and closing conditions are met and a superior offer failed to materialise, the deal with Apax-led group is expected to close in the fourth quarter of 2011.
Earlier in July, it was rumoured that KCI was the subject of a takeover approach by the US private equity group, Blackstone, and other investors including the global asset management company, Kohlberg Kravis Roberts.
This company report provides
Overview
Key contact information
Introduction to the company and its current activities
Summary of its financial performance
Who are the company’s major competitors?
Key recent events in an “at a glance” format
Financial Review
Current year and annual financial data, including revenue breakdowns by product area and geographic region (if available)
Table providing in-depth five-year financial analysis
Employee data, including breakdown by company division and geographic location
Strategic Focus
Investigates the company’s aims and its areas of focus
Products
Core product areas, key brands, product approvals and launches Research and Development
How much has been invested in R&D?
Where is the research based?
What alliances and agreements does the company have and with whom?
Manufacturing and Distribution
Identifying the company’s manufacturing locations
Sales and marketing facilities
Agreements
With whom has the company reached agreements and what do they involve?
Key contracts awarded
Mergers, Acquisitions, Minority Investments and Divestments
Litigation
Key Corporate Events
The report was produced as part of Medical Device Companies Analysis (MDCA). For more information on MDCA, click here.
Table Of Contents
OVERVIEW.1
Recent Key Events2
FINANCIAL REVIEW 3
First Half 2011 Financial Results3
AHS4
LifeCell5
TSS.5
2010 Financial Results.6
AHS9
LifeCell10
TSS. 12
Five-Year Financial Data14
Outlook15
Employees.16
STRATEGIC FOCUS17
PRODUCTS19
Product Overview19
AHS.19
NPWT Products21
NPSM Products23
GraftJacket Matrix.23
Competition.23
LifeCell.24
Products and Clinical Applications24
Allograft-Based Regenerative Tissue Matrix Products.24
Xenograft-based Reconstructive Tissue Matrix Products25
Competition.26
TSS26
Products and Clinical Applications27
Critical Care27
Wound Care27
Bariatric Care.28
Competition.28
RESEARCH AND DEVELOPMENT.29
R&D Facilities.29
R&D Expenditure.30
Studies and Trials.30
Transcontinental Wound Registry.30
RICH Study31
Trial Comparing NPWT between the KCI Wound V.A.C. Therapy System and Spiracur’s SNaP Wound Care System 31
Conexa Clinical Trial32
ABTAC Study.32
MANUFACTURING AND DISTRIBUTION33
AHS33
LifeCell33
TSS.33
AGREEMENTS 34
Wright Medical34
Novadaq Technologies.35
Carroll Hospital Group35
3M Health Care35
Hill-Rom36
NovaBay Pharmaceuticals36
Paul Hartmann.36
Avail Medical Products37
Wake Forest University.37
MERGERS AND ACQUISITIONS 38
TechniMotion Medical38
LifeCell38
BioMonde Assets.39
MedClaim.39
Polymedics.39
Beiersdorf-Jobst DVT Products39
RIK Medical.39
Equi-Tron Manufacturing.39
Ethos Medical Group.39
H.F. Systems.39
Trac Medical’s Access Assets.40
Clinical Systems.40
Medical Retro Design40
DIVESTITURES .41
KCI Insurance.41
KCI Financial Services41
KCI Therapeutic Services.41
LITIGATION.42
Wake Forest University.42
Smith & Nephew and Medela.42
Innovative Therapies Inc42
Boehringer and Convatec42
Medela, Mölnlycke Health Care and Smith & Nephew - Germany43
Smith & Nephew - Australia43
Smith & Nephew - Germany43
Smith & Nephew - France43
Smith & Nephew - UK.43
LifeCell44
OIG Investigation.44
KEY CORPORATE EVENTS45
List of Tables
SUMMARY OPERATING RESULTS.iii
KCI – First Half 2011 Financial Results3
KCI - First Half 2011 Revenues by Geographic Area.3
KCI - First Half 2011 Revenue by Business Segment and Geographic Area.4
KCI - AHS Business Segment Revenues, First Half 2011.4
KCI - LifeCell Business Segment Revenues, First Half 20115
KCI - TSS Business Segment Revenues, First Half 20115
KCI – Annual Financial Results, 2006-20106
KCI - Annual Revenues by Geographic Area, 2006-20107
KCI - Annual Revenue by Business Segment and Geographic Area, 2006-20108
KCI - AHS Business, Annual Financial Results, 2006-20109
KCI - LifeCell Business, Annual Financial Results, 2008-2010.10
KCI - TSS Business, Annual Financial Results, 2006-2010.12
KCI – Five-Year Financial Summary, 2006-201014
KCI – Annual R&D Expenditure, 2006-2010 30
Agreements Summary34
Mergers and Acquisitions Summary.38
List of Charts
KCI - Annual Revenue and Operating Income, 2006-2010.6
KCI - Annual Revenues by Geographic Area, 2006-20107
KCI - Annual Revenue by Business Segment, 2006-20108
KCI - AHS Business, Annual Revenue and Operating Income9
KCI - AHS Business, Annual Product Sales, 2006-2010.10
KCI - LifeCell Business, Annual Sales and Operating Income, 2008-2010.11
KCI - LifeCell Business, Annual Sales by Geographic Region, 2008-201011
KCI - TSS Business, Annual Revenues and Operating Income, 2006-201012
KCI - TSS Business, Annual Product Sales, 2006-201013
KCI – 2010 Revenue by Product Area19
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